RSI, MACD, and other momentum indicators can help identify wave boundaries. Divergences often signal wave 5 or wave C completion.
Description
While Elliott Wave analysis stands on its own, technical indicators provide useful supplementary signals. Momentum divergences (price making a new extreme while the indicator does not) frequently mark the end of wave 5 or wave C. Moving averages and oscillators can also help identify the degree of trend.
Key Points
- RSI divergence at wave 5 high: price makes new high but RSI does not → potential wave 5 completion
- MACD: divergence between MACD and price at wave 5 or B wave extremes is a common signal
- RSI in strong wave 3: often reaches 70+ (overbought) but the trend continues — do not use as a reversal signal alone
- Moving averages: a break of the key moving average (e.g., 200-day) can signal a degree change
- Indicators are supplements — never override a clear wave count with an indicator signal alone
